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From Warehouse to Consumer - How can we cost effectively get pet products into the consumer’s hands?
The most cost effective part of a product’s journey is from the
shelf to the checkout, we rely on the consumer to carry out this
handling process. The most expensive exercise is getting the
product to the shelf.
Whatever branch of retailing you are in, the area that is
absorbing most energy is in supply chain management.
The supermarkets, who are also in pet products, lead the way. In
Australia, Woolworths have saved $2 billion Australian dollars
by reducing their distribution centres from 31 to 11 and have
also ensured their inventory turnaround has gone from 16 days to
12 days. Tesco in the UK have reduced their inventory at store
level to 5 days. These are real savings to the retail industry.
Push it or pull it Traditionally the industry has pushed
products through the industry. Suppliers have sold products to
retailers, retailers have put them on the shelf with the hope
that consumers would buy them.
The industry will change to a pull supply chain management
system. This is where the chain initiation starts with the
consumer who buys a products, this triggers a process where the
retailer orders product from the supplier based on a “just in
time” process.
Supply chain management really means supply chain integration.
We all have to work together.
Why now? There are a number of reasons. The dominance of
Wal-Mart’s (the world’s biggest business) slow growth in retail
sectors, high inventory levels and high out of stocks have
forced retailers and suppliers to analyse the supply chain and
look for means of improvement.
Where do you start? Start with the store, re-look at the
category with the customer in mind, develop best shelf practice
planograms, list the shelf strategy and work backwards towards
the vendor.
This process is a challenge for all concerned. It is more than
looking at IT strategies. It includes taking on board RFI (Radio
Frequency Identification), something all Wal-Mart suppliers have
to have implemented by 2005. It includes re-looking at
distribution channels and who organises and pays for the
channel.
